Local agencies are backing a state senate bill that would release South Coast Air Quality Management District permits for businesses and public services now on hold because of a 2008 court ruling.

In November, Los Angeles Superior Court Judge Ann I. Jones struck down two AQMD policies, one allowing the issuance of credits to power plants and another regarding its credit-tracking system.

Jones found that AQMD did not conduct an adequate environmental analysis of the policies as required under law.

The ruling means that more than 1,200 permits are on hold, with more than 140 in AQMD’s San Bernardino County jurisdiction, including 10 at Ameron Steel Fabrication in Fontana, one at the Running Springs Water District wastewater treatment plant and at least two at Crafton Hills College in Yucaipa.

SB696 – authored by Senator Rod Wright (D-Los Angeles) – would allow AQMD to issue permits to small businesses and essential public services if safeguards are in place. Also, the bill allows power plants to have limited access to AQMD credits if approved by the California Energy Commission.

Wright’s office said Wednesday the ruling could stop about $4 billion in economic activity throughout the state, and it could impact between 40,000 and 60,000 jobs.

“We have a major economic problem in the state,” said Stan Diorio, legislative director for Wright’s office. “We have stopped the ability to do any growth. It’s frustrating.”

On behalf of the 29 local elected officials who serve on the county’s transportation commission – known as San Bernardino Associated Governments – Jennifer Franco, director of intergovernmental and legislative affairs for the commission, wrote in a June letter of support to Wright that AQMD’s inability to issue permits for projects eligible for credits could delay projects and stall economic recovery for the region.

Before a pollution-generating facility can open in Southern California, or before a company replaces or installs pollution-generating equipment, emission credits are needed to offset the anticipated pollution, said Sam Atwood, spokesman for AQMD.

The credits are created when older, less green-friendly facilities shut down or when existing facilities reduce emissions, Atwood said.

The AQMD also has credits from its internal bank that it made available free to public agencies and small businesses.

Otherwise, the credits would need to be purchased on the open market, which can be expensive.

For example, credits for a tortilla fryer and oven would cost $1.6 million, according to AQMD. Credits for a hospital boiler would cost an estimated $2 million.

The AQMD issued credits for free for facilities that produced less than four tons per year of pollutants.

Later, the AQMD made the credits available to power plants.

“Several environmental groups sued AQMD,” Atwood said. “They didn’t like an amendment that would have allowed the power plants to obtain the credits at $92,000 a pound.”

The Natural Resources Defense Council, Communities for a Better Environment and Coalition for a Safe Environment said the credits were going to go to polluters at too low a cost.

Atwood said Jones’ ruling not only made it impossible for power plants to get the credits, but for AQMD to provide them for all public facilities and businesses.

The ruling is under appeal, which puts a stay on cancelling thousands of previously issued permits.

Still, many businesses and public services are now just getting word of the ruling.

Ernest Marquez, senior civil engineer of public utilities in Banning, said Wednesday he hadn’t heard of the ruling, which may affect plans to go forward with an expansion of the city’s wastewater treatment facility.

“I’m not aware of it,” Marquez said.

The expansion’s design is about 90 percent complete and is scheduled to start construction in about a year, he said.

While AQMD will not readopt its rule to issue credits to power plants, it will readopt its rule on the tracking system, which would allow the credits to be issued to low-polluter facilities.

But that could take months.

In the meantime, no offset credits will be issued from AQMD’s internal bank. AQMD will issue permits only to sources that have provided their own offsets in the form of Emission Reduction Credit certificates purchased on the open market.

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